Varanium Capital Announces First Close Of INR 250 Cr Maiden Venture Debt Fund

SUMMARY

The venture debt fund has a target corpus of INR 250 Cr, with a greenshoe option of INR 50 Cr

Varanium Capital plans to back around 100 startups in India via revenue-based financing and traditional venture debt

According to an Inc42 report, debt raised by Indian startups during H1 2023 was 2.92X higher than H2 2022

Mumbai-based asset management company (AMC) Varanium Capital announced the first close of its maiden venture debt fund, which has a target corpus of INR 250 Cr, with a greenshoe option of INR 50 Cr.

The firm, which claims to manage $1 Bn in assets across multiple asset classes, said it will back around 100 startups in India via revenue-based financing and traditional venture debt.

Varanium Capital has secured the backing of domestic and global LPs, along with an anchor investor for the venture debt fund. The AMC also said that it has received commitments from family offices, ultra-high-net-worth individuals, and entrepreneurs, including former CEOs and CXOs of banks.

The venture debt fund will be managed by Nawal Bachhuka, principal of the venture fund at Varanium, with prior experience with Aditya Birla Finance.

Bachhuka is joined by the ex-senior management team of IndusInd Bank – Romesh Sobti (former CEO), KS Sridhar (former CRO), Suhail Chander (former head of corporate lending) and Paul Abraham (former COO).

Further, the investment committee will comprise TS Anantakrishnan (founder of Varanium group), Aparajit Bhandarkar (Venture Capital Partner), Suhail Chander, and KS Sridhar.

“Venture debt fund will provide financial backing to start-ups in sectors such as D2C, SaaS, B2B ecommerce and fintech who require to scale their operations. With a corpus size of INR 250 Crores, the fund is well-positioned to provide timely capital injections, enabling start-ups to seize growth opportunities and expand their market reach,” commented TS Anantakrishnan, founder of Varanium Capital.

Varanium’s first close comes at a time when debt funding has increased significantly over the past few months, given the decline of equity funding simultaneously.

According to Inc42’s H1 2023 Startup Funding Report, Indian startups raised a total of $260.7 Mn in debt funding during the first half of 2023 (H1 2023), 2.92X higher than the $89.3 Mn debt funding raised in H2 2022.

Further, the percentage of debt funding in total funding (equity+debt) raised by startups has also gone from 1.48% of the total funding raised in H2 2022 to 4.81% of the total funding raised in H1 2023.

Varanium Capital’s fund announcement comes when many debt funds have been announced in the last 18 months, including Lighthouse Canton ($67.3 Mn), Stride Ventures Fund III ($100 Mn), AIF Grand Anicut Fund II ($110 Mn), and Alteria Capital ($122 Mn), among others.